Programme for Government – Pensions

With all that is going on with the Covid 19 pandemic, it was easy to forget that we actually had a general election in February. The people voted for change but ended up with a coalition of the only two parties to ever to hold the office of the Taoiseach, along with the Green Party. The published their programme for government, so we had a look to see what they propose to do with pensions in the time of the next government.

State Pension

Under this government, the extending of the age people receive the State pension will not take effect and will remain at 66 years of age. If you want to retire at 65 you can and claim Jobseekers benefit without the need to sign on or actively look for work. This was already in place and those over 60 didn’t have to seek work in order to claim Jobseekers.

They are also going to establish a Commission on Pensions. If there is something that Irish governments love, it’s a pension commission/ body/ board. All of whom write massive reports that go unactioned.

The Commission is going to examine the sustainability and eligibilty issues with the State pension including contribution levels. The Pensions Roadmap that was issued in March 2018 found there would be a pension deficit of up to €400 billion over the next 50 years if something isn’t changed. Will another Commission tell us something different? I doubt it. The pension age of 66 won’t be changed until they report back.

The government do intend on introducing a Total Contributions approach to PRSI contributions, which will make it fairer on those who have taken career breaks.

They will also introduce a facility to defer your State pension and get an actuarially increased amount if you start drawing it down later in life. I will be interested to see how this works out. The State pension is paid at 66, which is late enough in life. As no one knows how long they will live for, will an increased payment later in life pay out more than a lower amount paid out sooner?


The other area regarding pensions in the programme for government is the auto-enrolment scheme, which was originally published in November 2019.

This seems to be similar to what was proposed already, with the phased introduction of contributions over a 10 year period. The idea was for employer and employee contributions of 1.5% of salary, increasing by 1.5% every 3 years until it reached 6% each.

There is no detail of a start date but reference is made to the current economic strain people are under due to the pandemic. The original target was for this to be up and running by 2022. Given the size of the infrastructure project required by providers to get this up and running, I always thought this was an ambitious timeframe. Now with these companies having vastly reduced income through reduced sales and reduced assets under management, I would say they are less than enthusiastic to plough millions into a project that will take decades to start producing profits for them.

That’s all they have to say on pensions. Issues such as tax relief and limits on pension fund sizes are usually topics addressed in the annual budget, so we will wait and see what happens in that regard in October.

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